It's All About Family Values

Eschewing the latest and greatest, shoppers are opting for low-cost devices that help them be closer to loved ones.

Sobered by war and a wobbly economy, holiday shoppers are snapping up more electronic gadgets than in years past but focusing their spending on cheaper devices that bring together friends and family.

DVD players, video game consoles, cell phones, digital cameras, home security cameras, walkie-talkies and karaoke systems are top sellers at local retailers.

Instead of seeking out the latest and greatest, consumers are settling for established technology and demanding bargains. As a result, total dollar sales of consumer electronics are expected to decline this year after 10 consecutive years of growth--even though overall volume is expected to increase.

Total factory sales of consumer electronics are projected to decline 5% this year to $90.6billion in North America, down from $95.5 billion last year, according to the Consumer Electronics Assn., an industry group based in Arlington, Va.

"People are dividing their buying into needs and wants, and they're focusing more on the things they think they need," said Tom Edwards, analyst with NPD Intelect, a market research firm in Port Washington, N.Y. "At the same time, they want to enjoy life. They want to be more family-and people-oriented."

That desire has driven sales of home entertainment devices, from DVD players and game consoles to home theater systems to high-end television sets.

DVD players in particular have taken off as prices plummeted. At Amazon.com, the number of DVD players sold from Nov. 9 to Nov. 19 grew 75% from the same period last year. Of Amazon.com's five best-selling items from Nov. 9 to Nov. 26, three are DVD players. NPD projects that more than 13million DVD players will be sold this year, up from 6.4 million in 2000.

"DVD sales have been phenomenal," said Brent Rusick, vice president of sales at Buy.com, an Internet retailer based in Aliso Viejo. "That's driven by ever lower price points. You can get a DVD player for under $100 now. There are also a lot more movies on DVD now. 'Snow White,' for example, is only available on DVD."

Aside from next-generation video game consoles such as Microsoft Corp.'s Xbox and Nintendo's GameCube, big sellers have been technologies on the market for several years whose prices have drifted down, Rusick said.

"They want rock-bottom prices," said Jonathan Magasanik, senior vice president of merchandising at office supply chain Staples Inc. Consistent with the trend toward spending more time at home, TVs and home theater systems also are enjoying a surge in sales.

"After Sept. 11, TV sales picked up," said NPD's Edwards. "People were glued to their TVs. And by the end of the week, people wanted something to distract them from the gloom. So they got bigger and better-quality TV sets. The smaller sets were shifted into the kids' room or the kitchen, and people just went out and got the biggest TV they could get into their houses--from 27 inches to 35 inches and projection TVs."

Along with the renewed emphasis on home entertainment came an increase in surround-sound systems for their TVs. Manufacturers are expected to ship 2.2 million units this year, up from 1.2million in 2000, according to the Consumer Electronics Assn.

"People have decided that if they're not going to travel, they might as well have a great home entertainment system," said Pat McGann, store manager for the Good Guys store in Valencia.

With so many new gadgets for the home, people also are buying home security systems to protect their purchases.

"Cameras and monitoring equipment have taken off like crazy in the last three months," said Rusick of Buy.com. "Home security systems have really become a phenomenon. For some reason, people's sense of security has changed."

The desire to stay in touch also has propelled purchases of cell phones, digital cameras and walkie-talkies.

"We're seeing people buy a lot of family radios that let them stay in touch within a two-to five-mile radius," said Ben Strong, production manager for Yahoo Shopping in Sunnyvale, Calif.

Prepaid cell phones are selling well at Wal-Mart Stores Inc., the nation's largest retailer. And consumers are picking up digital cameras at all prices, from $100 to $1,000, at Circuit City.

"Cell phones and digital cameras are part of keeping in touch," Edwards said. "Snap a photo and send it to Grandma's house, then call to see if she got it."

Several technologies are not faring as well, including VCRs, which are rapidly being replaced by low-cost DVD players, and MP3 players, whose popularity has ebbed as uncertainty swirls around the effect of copyright protections on digital music.

Manufacturers are expected to ship 367 million MP3 players this year, down from 510 million in 2000, according to the electronics trade group.

Such declines, along with an emphasis on low-priced products, are likely to offset any gains in other categories such as DVD players and video game consoles.